Federal Insider

Ahead of the October 1 deadline for transitioning to ICD-10 codes, the Centers for Medicare and Medicaid Services (CMS) is urging providers to avail themselves of CMS resources and also is promising slightly more leeway for those who run into trouble. ICD-10 introduces more than 100,000 new diagnostic and procedure codes, affecting everything from reimbursement to medical research.

Starting October 1, Medicare will only accept claims with a date of service on or after October 1, 2015, if they have a valid ICD-10 code, and Medicare’s claims processing systems will not accept or translate the old ICD-9 codes. Experts have warned that labs could find themselves stuck between physicians and payers, because labs will have to rely on physicians to provide accurate ICD-10 diagnosis codes on test orders. Missing or improper codes can lead to payment denials for labs. In a July 7 memorandum, CMS promised to appoint an ICD-10 ombudsman, as well as set up a communication center to help providers resolve code-related problems expediently.

The agency will also make a special allowance for claims billed under the part B physician fee schedule for the first 12 months of ICD-10 implementation. During that time, CMS contractors will not deny claims through automated review based solely on the specificity of the ICD-10 diagnosis code, as long as the code is in the right family. CMS resources are available at www.cms.gov/ICD10.

Device Tax Has Outsized Impact on Small Companies

The direct effects of the 2.3% excise tax on diagnostics and other medical devices from the Affordable Care Act are not easy to measure, but data show large device companies have experienced strong financial growth despite the tax, while small and medium-sized companies fared poorly, according to a report from the Government Accountability Office (GAO).

GAO examined net sales and profits of 102 medical device companies before and after the tax. Net sales increased overall from about $95 billion in 2005 to about $136 billion in 2014—approximately a 43% increase over the period and an average annual increase of around 4%. Similarly, net profits also increased overall from approximately $11.4 billion in 2005 to about $16.5 billion in 2014—a 44% increase over the period and an average annual rate of increase of 4%.

However, the 35 medium-sized and 37 small medical device companies GAO reviewed each experienced overall net losses in each year, while the 30 largest companies accounted for at least 95% of the total net sales. GAO noted in the report that its analysis cannot prove a causal relationship between the tax and companies’ sales or profits, because any changes could be due to other factors, such as mergers and acquisitions or the introduction of new products. n HEALTH

Insurance Marketplace Premium Growth Slowed in 2015

In 2015 consumers benefitted from new insurance companies entering the marketplace created by the Affordable Care Act, as intensifying price competition kept premium growth under control, according to a report from the Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation.

This year, 86% of marketplaceeligible consumers could choose from at least three insurance companies, up from 70% in 2014. Counties with net increases in the number of insurers had lower premium increases than other counties in 2015, and for each new insurer that offered coverage, there was a 2.8 percentage point lower rate increase for the second-lowestcost silver plan from 2014 to 2015. According to the report, most counties gained at least one new insurer, 33% held steady, and 8% experienced a net loss.

The study cited previous research that has shown an inverse relationship between the number of insurers and premium costs: On average, each additional insurer in a rating area is associated with a 4% lower secondlowest- cost silver plan premium. Open Enrollment for the 2016 marketplace plans begins November 1.